The UK General Election - 4th July 2024

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Tory Leadership Race: what could a new Prime Minister mean for net zero?

Alex Wray

Account Manager

The dust has settled after a week of dramatic departures. Boris Johnson, the most powerful man in British politics, will step down, forced out by his own ministers. Many of them now strive to replace him, and jostle for support in what looks to be a bitter leadership election.

The prize? The highest position in Government.

Whilst Penny Mordaunt is currently amongst the top three with the bookies, history suggests the victor will have previously held a Great Office of State, which would make Rishi Sunak and Liz Truss the front runners.

A difficult job awaits any successful candidate, as the country is gripped by a tough cost of living crisis, and another recession looms.

Current favourite, Sunak, sparked the rebellion against Johnson when he quit his position as Chancellor of the Exchequer. In his resignation letter he argued the Government must “make sacrifices and take difficult decisions” in response to the current financial situation.

Sunak regards himself as a low tax and spend Thatcherite, and after overseeing a huge budget at the height of the pandemic has been reluctant to approve further expenditure.

The desire to reduce borrowing brought Sunak into conflict with Johnson, who wanted to turn the tide of public opinion and re-set his ministry with tax cuts and investment.

While the partnership between the two Downing Street neighbours became fraught behind the scenes. Sunak’s frosty relationship with Kwasi Kwarteng, the Business Secretary, played out in public, and the pair engaged in a vicious briefing war to the press.

Kwarteng strongly supports the commitment to balance the amount of emissions the UK produces and removes from the atmosphere by 2050. This enthusiasm contrasts with the ex-Chancellor’s wariness around the cost of the green policies required to deliver net zero.

However, the most notable clash between the pair focused on the prospect of a windfall tax on oil and gas companies. Kwarteng vocally opposed the policy when Labour called for it and was shocked when Sunak went further to include energy generators within his plans.

Announcing his support for Liz Truss, Kwarteng hit out at Sunak in a thinly veiled attack as he argued the Government “can’t simply be accountants trying to balance the books the whole time”. He will be rewarded with his pick of Cabinet jobs if the foreign secretary wins.

So far, the leadership election has seen a remarkable volume of tax cuts promised by the candidates. Truss is no different, and has launched her campaign with pledges to reduce National Insurance, corporation tax and business rates as soon as she takes office.

To fund these cuts, Truss plans to lower the national debt at a slower rate, and initiate a spending review. Departments across Government could find their budgets reduced, and existing green policies may find themselves under threat.

Reassuringly for net zero supporters, Truss has frequently commented on the need to tackle the climate crisis, and Kwarteng’s backing indicates she is still aligned with the UK’s goals.  Full scale opposition to net zero is therefore only likely to come from outside candidates.

Suella Braverman and Kemi Badenoch have both promised to rip up the 2050 target, arguing it should be delayed until the costs are understood. The latter is popular with grassroots Tory members and could threaten if she makes it through to the final ballot.

As for Mordaunt, she is unlikely to agree. The Minister for Trade Policy praised the UK for “leading the world” in the development of green technology. She believes net zero can provide opportunities in left behind regions and generate economic growth – the strongest endorsement of the three current frontrunners.

Regardless of who wins, the challenges posed by climate change remain. The new Prime Minister must be ambitious to tackle carbon emissions and biodiversity decline. Areas such as renewables, electric transport, and energy efficiency all require urgent support.

While neither Sunak nor Truss are likely to challenge existing net zero targets, it is clear the Conservative Party has turned away from tax and spend economics. The chance of enhanced government investment in green policies and infrastructure may well have decreased.

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